Gold News

Jim Rogers: "US Heading for Disaster. Be Prepared"

Nowhere near enough US gold to support the Dollar against America's debts...
 
SPEAKING last night to my New York Markets Live radio show online, Jim Rogers forecast a nasty outlook for the global and especially US economy, writes Miguel Perez-Santalla at BullionVault.
 
"In 1918," Jim Rogers explained, "the UK was the richest most powerful nation on earth. Within a generation it was in economic chaos, and within 3 generations it was bankrupt and the IMF had to bail them out. They couldn't sell government bonds things got so bad."
 
Today the United States looks a lot like it could suffer the same loss of wealth and power as the UK began 100 years ago, says Jim Rogers. Most particularly:
"I'm afraid that...right now there's no restriction on the Federal Reserve at all, and at the same time there's no restriction on Congress anymore. They keep making these deals to put off any kind of serious cutbacks.
 
"[Policymakers] everywhere are under no constraint. Central banks can print as much as they want, the governments spend as much as they want. So there's no reason this can't go on for a while, because any corrections due to tapering will probably be temporary."
Why temporary? Because central banks will panic at the first sign of trouble, and go straight back to money printing again. "Until, eventually," thinks Jim Rogers, "the market's going to say we say we're not gonna take this garbage anymore, this is absurd.
"This is not going to be fun. Don't think I'm looking forward to this. It's going to be a disaster. I don't see the bureaucrats coming to their senses, so it's going to be the markets, and it's going to mean a lot of unpleasant times.
 
"You're already seeing social unrest in many countries, and it's going to get a lot worse I assure you."
Jim Rogers told me, when I asked for his thoughts on this year's strong rise in stock markets, that thanks to quantitative easing and zero interest rates there is now "an artificial sea of liquidity and it's going into stocks.
"This is a lot of fun for those participating. But the overall situation is getting worse and worse. We're all going to have to live with the consequences of printing money."
So drilling down, what effect might the much-awaited tapering of QE by the US Fed in 2014 have on the economy? Jim Rogers thinks:
"These guys are academics and bureaucrats. I suspect the first time they do come to their senses and start to cut back it will lead to some kind of correction, markets going down everywhere. So they will panic and they will start printing again.
 
"We've had economic slowdowns every 4-6 years in America...In 2008 it got worse and worse and worse, because the debt so much higher. Look out the window. You can probably see the debt rising! It's like the beanstalk.
 
"Whether it's 2014, 2015, whenever [the downturn] comes next time it's gonna be much much worse, because the debt is so much higher.
 
"Be careful. Be worried. Be prepared."
On the other side of that crisis, I asked, might the United States' gold reserves help support the Dollar in some new currency regime?
 
"I don't know that it's there," Jim Rogers said. "I have no reason to assume it's not, except that there's not been a proper audit of America's gold in decades, if ever."
 
Even if the US government does indeed hold the 8,133 tonnes of gold bullion reserves it reports, "It's not nearly enough to back the Dollar," he went on.
"Because we're the largest debtor nation in history – trillions and trillions of dollars."
 

Vice president of business development for BullionVault from 2012 to 2014, Miguel Perez-Santalla is a fierce advocate for retail investors, and a regular speaker at industry and media events. With over 30 years' experience in the precious metals business, Miguel has worked at the United States' top coin dealerships, as well as international refining group Heraeus.

See the full archive of Miguel Perez-Santalla articles.

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